Category: Technology License

Huawei founder Ren Zhengfei has dangled the opportunity to create a US competitor in-front of the faces of US officials seemingly in an effort to ease tensions.

At a panel session in the Huawei Shenzhen headquarters, Zhengfei has presented the US with an opportunity to fulfil an ambition it has had for years; to compete toe-to-toe with the network infrastructure vendors around the world. If Huawei was to sell an exclusive license for its 5G smarts to a US company, the competitive landscape could be due a very notable disruption.

“I think that we should give (an) exclusive license with one US company,” Zhengfei said during the session. “After getting a license, they will be able to take our technology to compete with markets around the world.”

A tier-one presence in the network infrastructure ecosystem is something which the US has been missing for years. Lucent was a US firm, though this disappeared thanks to the merger with Alcatel in 2006, and subsequently being purchased by Nokia. If you have a look at the vendor community for 5G networks, there is very little contribution from the US.

This is a very interesting ploy from Huawei and works well on a couple of different levels.

Firstly, should this bait be snapped up by the US Government, tensions would presumably ease. If a US company can benefit from the Huawei smarts, surely it would be in the interest of that organization to see scrutiny on Huawei eased. This a logical outcome, though little from this saga has been logical to date.

Secondly, it will allow Huawei to make money from a market where it has made little money before. The primary focus of a US company would presumably be the US market, therefore by paying a license fee to Huawei, the Chinese vendor is profiting from the US.

It might have to make sacrifices elsewhere, but should the US company be successful, arguably it would be Nokia and Ericsson who would feel the brunt of the pain. These are the two vendors who have profited most handsomely from the US telco market.

Although these are interesting comments from Zhengfei, we’ll wait to see developments before investing too much emotionally. Huawei has suggested here source code, hardware, software, verification, production, and manufacturing know-how could be included in the license, but nothing is confirmed until it is in writing.

Access to the source code and verification are two interesting elements here. In theory, should the US competitor want to improve security and resilience due to the potential threat of foreign intrusion, it could build on-top of the foundations the Huawei license offers. It could be a means to appease the security concerns of headline chasing politicians.